U.S. Markets open in 6 hrs 26 mins

Edited Transcript of ALM.MC earnings conference call or presentation 11-Nov-19 9:00am GMT

Q3 2019 Almirall SA Earnings Call

Barcelona Nov 28, 2019 (Thomson StreetEvents) -- Edited Transcript of Almirall SA earnings conference call or presentation Monday, November 11, 2019 at 9:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Bhushan Hardas

Almirall, S.A. - Chief Scientific Officer, Executive VP of R&D and Member of Executive Board

* Michael McClellan

Almirall, S.A. - CFO

* Pablo Divasson del Fraile

Almirall, S.A. - Head of IR & Corporate External Communication

* Peter Guenter

Almirall, S.A. - CEO, Chairman of Management Board & Executive Director

================================================================================

Conference Call Participants

================================================================================

* Francisco Ruiz

Exane BNP Paribas, Research Division - Research Analyst

* Guilherme Macedo Sampaio

Banco Português de Investimento, S.A., Research Division - Analyst

* Jaime Escribano

Grupo Santander, Research Division - Equity Analyst

* Jo Walton

Crédit Suisse AG, Research Division - MD

* Krishna Chaitanya Arikatla

Goldman Sachs Group Inc., Research Division - Research Analyst

* Peter James Welford

Jefferies LLC, Research Division - Senior Equity Analyst & European Pharmaceuticals Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good day. And welcome to the Almirall's Q3 Financial Results and Business Update Presentation. Today's conference is being recorded.

At this time, I would like to turn the conference over to Pablo Divasson. Please go ahead, sir.

--------------------------------------------------------------------------------

Pablo Divasson del Fraile, Almirall, S.A. - Head of IR & Corporate External Communication [2]

--------------------------------------------------------------------------------

Thank you, Jody. Good morning, everyone. Welcome to the Almirall Q3 2019 Financial Results Conference Call. This presentation was released earlier this morning and is available on our corporate website. Presenting today, we have Peter Guenter, Chief Executive Officer; and Bhushan Hardas, Executive Vice President, Research and Development, CSO. Peter will make some introductory remarks about the first half -- about the 9 months and will provide you with details on the financials and later come back to sum up. Bhushan will update you on our recent announcement on our pipeline. After that, we will open for a Q&A session.

Before we move ahead, I would like to remind you that certain statements that we will make in this presentation are forward-looking statements. These forward-looking statements reflect Almirall's judgment and analysis only as of today, and results may differ materially from current expectations based on a number of factors affecting our businesses.

So with that, I will pass you over to our CEO, Peter Guenter.

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [3]

--------------------------------------------------------------------------------

Thanks a lot, Pablo, for the introduction, and good morning to everyone on the call.

First of all, this is the first call without our former CFO, David Nieto. I would like to thank once more David for his contribution over the last 2.5 years, and I wish him all the best in his future endeavors.

Also, since it is the first day of Mike McClellan as our new CFO, I will take care of the financial part of the presentation. Since we have Mike with us today, Mike, I would like you to say a few words.

--------------------------------------------------------------------------------

Michael McClellan, Almirall, S.A. - CFO [4]

--------------------------------------------------------------------------------

Yes. Good morning, everyone. I'm very excited to be here with Almirall. It's my first day, so I won't be very active on the call but looking forward to getting to know the investor community and everybody in the near future.

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [5]

--------------------------------------------------------------------------------

Thanks a lot, Mike.

So going back to the business. I'm very pleased to say that there is continued good business momentum of our growth drivers. I will update you on the financial details shortly.

In the first 9 months of the year, we continue to see good growth in our European psoriasis franchise. I will provide you with more details on Skilarence and ILUMETRI in a moment. We have been very encouraged by the strong data since the launch of Seysara in the U.S., where the product continues to gain market share in dermatology. I will elaborate on this shortly. This quarter, we have made significant progress in the late-stage R&D pipeline. As you are aware from our recent announcements, we have finalized and initiated the Phase III trial of lebrikizumab, submitted 2 dossiers to the marketing authorization holder in Europe for finasteride in androgenetic alopecia and terbinafine for onychomycosis.

And finally, as announced at the AAD in Washington, tirbanibulin for actinic keratosis completed 2 Phase III studies, which have achieved their primary end points and moves forward to registration. Bhushan will be discussing this in more depth later. In summary, we are very pleased with the continued momentum generated by the business during Q3, and therefore, are confident in meeting our upgraded guidance for 2019.

Now moving to Skilarence. We're very pleased to see our recent launches gaining good momentum in their respective markets. Firstly, within psoriasis franchise, Skilarence continues to gain market share with strong performances in Germany and The Netherlands, which is an important market due to the significant previous DMF experience there. We have achieved over 80% market share in Germany for the 30-milligram initiation pack for new patients. The Q3 seasonality impact is in line with our expectations. Unit sales continues to gain good momentum in countries where we have launched. For example, the Spanish and Italian markets continued to drive overall unit sales momentum, with Italy surpassing 300 units a week in September. We are confident we will continue to grow the brands, although at a more gradual pace compared to last year because last year in Q4, we benefited from a very strong launch in the Netherlands.

Turning to ILUMETRI. The good initial uptake of ILUMETRI in Germany continues with sequential monthly growth in number of patients treated. Our commercial teams have been very active this quarter continuing the extensive European rollout campaign. National health care systems have published positive comments on the use of the product, including NICE in England and the national Spanish authorities. Additionally, at the European Academy of Dermatology Congress in Madrid, we presented the results of 2 extension studies that confirm the long-term safety of tildrakizumab and showing high and durable PASI and PGA response rates, supporting the strong commercial foundation for this product. Also, this quarter, we have successfully agreed a final price negotiation in Germany, which was in line with our expectations at EUR 12,000 a year, which will come into effect as of November 1.

Turning to the U.S. We have been very encouraged by the initial take of Seysara, where early into the launch, Seysara became the #1 branded product in the U.S. oral acne markets. That momentum has continued in Q3 where we have increased our market share in the branded and generic market, achieving 5.8% of TRx market share of total prescriptions driven by dermatologists. That's an additional 1.6% gain in market share quarter-on-quarter. Market coverage has also increased quarter-on-quarter with around 59% restricted and 37% unrestricted coverage.

The utility and effectiveness of having an oral antibiotic approved for a wide age range of patients continues to receive excellent feedback from KOLs and patients. Our promotional education program has reached over 2,500 providers, and this positive feedback is captured in the data with over 4,200 dermatologists having prescribed Seysara in the third quarter, with 89% prescribing at least 2 scripts. And so again, operationally, Q3 continued to see good momentum.

Let me now guide you through some of the financial highlights for the quarter. We have delivered what we believe is a very solid set of financial results for the first 9 months of the year. Key highlights are: Total revenues and net sales growing at 15% and 17%, respectively, at constant exchange rates driven by our recent launches and the acquired products in the U.S.; also, a positive evolution of the gross margin with a year-on-year improvement of 280 basis points at constant exchange rates driven by our improved product mix. Despite the significant investments in key launch -- in key product launches, we continued to exhibit good cost control and achieved a 3% CER decrease in SG&A spending versus last year. With this, we delivered strong operating leverage with EBITDA growth of 55% and a major improvement in the year-on-year margin. Also, and importantly, our operating cash flow was up to EUR 149 million.

Regarding key challenges we faced during the quarter. While we experienced year-to-date growth of Ciclopoli sales in Europe, we had a weaker performance in Asia due to the increase of competition for that product in that market.

On the next page, you can see the main contributors to net sales over the period. In particular, I want to highlight the strong contribution from our new product launches as they gain momentum in their respective markets. We expect meaningful contribution from these products in the near term as we continue to gain market share in key geographies. On the negative, you can see a small adverse impact on our existing product franchise, which comprises Ciclopoli in Asia, as mentioned previously, and Imunorix also in Asia, but in summary, a strong CER net sales growth of 18%.

Going to the P&L. You will see here in some detail the 17% net sales growth that I just mentioned. As expected, other income was a touch higher given milestones from AstraZeneca. Gross margin, as I've already stated, continues to benefit significantly from the favorable product mix. Regarding R&D, our spend increased relating to Phase IV studies for Skilarence and ILUMETRI. However, we continued to invest at a similar rate to last year in terms of percentage of sales. All of this lends to an excellent EBITDA growth of 55% at constant exchange rate.

Just a brief comment regarding SG&A evolution. You can see over the year, we continued to manage SG&A expenses tightly while investing in our new product launches. The meaningful savings made in the quarter of EUR 13 million are compensated by our launch costs for Q3.

Going further down the P&L. The combination of growth, improved product mix and strong cost control provided operating leverage with solid EBITDA and EBIT margins increase. With this, we generated a net income of EUR 97 million, and our normalized earnings per share increase to EUR 0.64 per share.

With that, I'll turn it to Bhushan for the R&D update.

--------------------------------------------------------------------------------

Bhushan Hardas, Almirall, S.A. - Chief Scientific Officer, Executive VP of R&D and Member of Executive Board [6]

--------------------------------------------------------------------------------

Thank you, Peter. This quarter, we have made significant progress in our late-stage pipeline. I will talk you through it.

As announced at the 2019 American Academy of Dermatology Annual Meeting in Washington, D.C., we have finalized the late last piece of information for our product in actinic keratosis, tirbanibulin, which takes us closer to submission of the dossier both in the U.S. FDA as well as EMA in Europe. Additionally, this quarter, we finalized the design of Phase III clinical trials for lebrikizumab and announced the initiation of the program ahead of schedule. Finasteride for androgenic alopecia and terbinafine for onychomycosis, remind you, both of them are topical products, were filed in Q3 to the European authorities. The finasteride filing puts us on target for first national phase approval estimated in late 2020 or early 2021.

Now looking at lebrikizumab. As you know, we recently announced the initiation of the Phase III clinical trials. These 2 III studies designed to demonstrate the best-in-disease profile of moderate to severe atopic dermatitis. Approximately 800 adults and adolescent patient ages 12 and over with moderate to severe atopic dermatitis will be enrolled in about 200 sites in the United States, Europe and Asia. In the design, the initial 16-weeks induction phase, all patients will be dosed at every 2 weeks with initial loading dose. Responders from this phase will enter 52-weeks maintenance phase, where these will be dosed at every 2 weeks or every 4 weeks. This design will give us data on flexibility of dosing for long-term maintenance of the patient. I would like to remind, atopic dermatitis is a chronic condition and needs long-term maintenance of these patients. The top line results for the 16-week induction period will be expected in first half of 2021.

Now coming to tirbanibulin. We have recurrency data, which is the last piece of information we require for the regulatory filing. We will file the dossier in early 2020 to the U.S. FDA and then after to European EMA. As announced at the 2019 AAD meeting, both Phase III studies, 003 and 004, achieved their primary efficacy end point. The primary end point is defined as 100% of complete clearance of the actinic keratosis lesions on day 57. Complete clearance was observed in 44% and 54% of the patients treated with tirbanibulin while in the 5% and 13% in patients treated with placebo. Very good results indeed. Most important local skin reaction is erythema. Only 3% and 10% of the patients responded -- reported severe erythema, excellent results as compared to most of the product on the market. Now we have 1 year recurrency data.

As shown in the slide, I would like to take a moment to put it into perspective. We remain very optimistic about the product profile, which we believe is very competitive given its compelling efficacy and excellent local skin profile. Importantly, all the KOLs and the practicing dermatologists that we have consulted with in the past few weeks remind us that actinic keratosis is a chronic disease. And therefore, they regularly re-treat the patients on a day-to-day basis. We are conducting a re-treatment study as requested by the EMA to be included in the label.

That being said, of course, we would like to make tirbanibulin even more competitive. We will begin to assess the benefits of more intensified regimen -- treatment regimen. This will further improve the efficacy and substantially reduce the recurrency rates. All that said, we strongly believe that we have very competitive product as it stands today. We plan to launch this in the U.S. market in first quarter 2021, followed shortly thereafter in Europe.

We would like to remind you, as mentioned initially, peak sales potential for this product is over EUR 250 million on the basis of the profile as it stands today. As I mentioned earlier, there is a potential to further improve the profile, and timing and the costs will be disclosed when we finalize the program.

Now I hand it over back to Peter for closing remarks.

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [7]

--------------------------------------------------------------------------------

Thanks a lot, Bhushan.

So as you have very clearly heard from us this morning, we have delivered a strong operational performance as the business continues to perform well in line with our expectations across our key markets Europe and the U.S. We enter into Q4 with strong momentum, where we are confident in Almirall's growth drivers, as Skilarence and ILUMETRI continue their good growth patterns and Seysara continues to gain market share from brands and generics in the U.S. dermatology market. Furthermore, as you have heard from Bhushan, our late-stage pipeline has achieved significant momentum this quarter. Finally, as you have heard from us before, a key component of our strategy remains to search for additional external opportunities to further complement our current growth profile and to generate sustainable value for our shareholders.

With that, I'll hand it back to Pablo to open the Q&A.

--------------------------------------------------------------------------------

Pablo Divasson del Fraile, Almirall, S.A. - Head of IR & Corporate External Communication [8]

--------------------------------------------------------------------------------

Thank you, Peter. Jody, back to you for the Q&A, please.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question for today is from Jo Walton from Crédit Suisse.

--------------------------------------------------------------------------------

Jo Walton, Crédit Suisse AG, Research Division - MD [2]

--------------------------------------------------------------------------------

I'm just going to chance my arm with 2 despite the instructions there, please. If you could just clarify what the sales were for Seysara in the third quarter. As you haven't, I don't think, given us a 1Q number, we've sort of been guessing the 1Q, 2Q. Therefore, we can get a 3-quarter number, but we can't get a sense of how much incremental revenue there was in the third quarter. And perhaps you could expand a little bit on that in terms of how you're managing to remove the patient assistance program, sort of what level you'd achieved in the third quarter, and how you think that, that will continue into the fourth quarter.

My second question would be about SG&A going forward, not so much necessarily this year but looking into next year. Originally, you said you could do something like flat SG&A on a cash basis. You've been able to do down 3% for the 9 months, and you've managed to take out lots of productivity savings to match your launch costs. As we think about modeling 2020, how should we be thinking about those SG&A costs going forward? And I'll rejoin the queue for more questions.

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [3]

--------------------------------------------------------------------------------

Yes. Thanks a lot, Jo, for the questions. So let me take them one by one. First question on Seysara, third quarter, so the third quarter net sales is actually EUR 7 million, which is actually a little bit lower in terms of net sales growth compared to the prescription growth. And the reason for that is that we took a provision for returns in the third quarter. So I think the better way to look at it is really the prescriptions moving forward, and you have seen, again, a nice increase in both -- in prescriptions and market share.

And in terms of potential impact of changes of the couponing program, while it's a bit early to say because we have basically remained more or less stable with our couponing program since we launched the product, I can tell you that early next year, we will make a change in the couponing program because we feel comfortable we can start to do that now that we have close to 40% unrestricted coverage and more than 60% total coverage. And we will give you more color on that in the next quarter.

And on SG&A, you're right, we have been extremely disciplined this year. And of course, we will continue to remain disciplined. However, I would tell you that repeating a decrease of SG&A in a year with ever more launches, which will lead 2020 with some pre-marketing costs for tirbanibulin and lebrikizumab, is, of course, going to be a bit of a heavy lifting. So we will give you again more color and more information when we announce the guidance for next year, but I think that you should model, to some degree, some increase of our SG&A for next year.

--------------------------------------------------------------------------------

Operator [4]

--------------------------------------------------------------------------------

Our question for today is from K.C. Arikatla from Goldman Sachs.

--------------------------------------------------------------------------------

Krishna Chaitanya Arikatla, Goldman Sachs Group Inc., Research Division - Research Analyst [5]

--------------------------------------------------------------------------------

I have 2. The first one on ILUMETRI, can you talk about the lack of sequential growth from 2Q here, please? And more broadly, how do you view the biologic treatment market for psoriasis just given increasing competition here?

And the second one, it's a housekeeping question. Can you confirm that your EBITDA guidance of EUR 300 million to EUR 310 million is on constant currency? And what's your expectation for currency headwinds or tailwinds this year?

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [6]

--------------------------------------------------------------------------------

Let me -- thanks, K.C., for the questions. So let me take the second first. So yes, the guidance that we have given has always been at constant exchange rate, and I wouldn't go in the crystal ball and give you any information how I think that the currencies are going to move. So we just communicate on constant currencies.

Your question on ILUMETRI, while you may remember that actually the way ILUMETRI is administered, it's a once-a-quarter injection. So especially since we are still fresh after the launch of the product, you may see some, I would say, quarterly aberrations in net sales, which are actually not confirmed by the patients that we capture on a quarterly basis. So that's why we gave you that slide in the deck where you see a very nice monthly increase in patients actually. So we continue to gain patients in Germany, and we have been launching in some other countries during the summer. So we think it's more relevant to look at those patient increases on a monthly or quarterly basis rather than the net sales because of that specific dose administration every quarter of ILUMETRI.

Then your broader question on what's the impact of the biologics on the whole market dynamics. Well, I think you can look at it both ways. It's clear that the number of competitors we have is increasing, I would say, every year. As you know, there are now 3 IL-23s that have been launched in the German market. On the other hand, it's also very clear that the IL-23 seems to be the winning class, and we have a lot of research indicating that, especially for patients without concomitant psoriatic arthritis, so let's call it a pure PSO psoriasis patients, that the IL-23 is in the eyes of many, many doctors to be preferred class. And of course -- so we think that all IL-23 ships will rise with the tide, and that we will benefit from that. But it's true -- it's also true, obviously, that it's a very competitive market out there. What we also start to see is a further acceleration of the overall biologics markets because of the new price proposition of many of those products. So we also think that there will be a general increase of use of biologics in countries like Germany, for instance, because of that push of many companies and also the new price points, so for example, biosimilar adalimumab.

--------------------------------------------------------------------------------

Operator [7]

--------------------------------------------------------------------------------

Our next question is from Peter Welford from Jefferies.

--------------------------------------------------------------------------------

Peter James Welford, Jefferies LLC, Research Division - Senior Equity Analyst & European Pharmaceuticals Analyst [8]

--------------------------------------------------------------------------------

Sorry, I'm going to just flout the rules and ask a couple, if I can do as well, please. Firstly, just on ACZONE, I wonder if you can give us an update. Should we still anticipate a generic by year-end? Then just on Seysara, I wonder if you could just outline -- presuming you've negotiated now payer coverage for 2020 already, could you give us any sort of outlook as to how those rates may improve? Or are those rates likely to stay pretty constant now going into 2020? And then just finally on Ciclopoli in Asia. Any comment on how you could potentially mitigate the impact there? Or should we anticipate those headwinds now to continue for the next few quarters?

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [9]

--------------------------------------------------------------------------------

Thanks a lot, Peter. So 3 questions. I'll provide you the answers to the 3. So first of all, on ACZONE 7.5% generics by year-end, this is still accurate as an information. So it will be around, indeed, the transition into the new year that you will see the generics of ACZONE 7.5% coming in. So that's confirmed by what we said last quarter.

Seysara coverage 2020, I think it's a little bit early to answer that question. Of course, we will do everything we can to further increase the coverage for next year, but we hope we will give you more color on that during the next earnings call.

And then Ciclopoli mitigation, yes, we are working on that. We have -- basically on Ciclopoli, you have 2 blocks. You have the Asian block and you have the European block, and we are putting into place a certain number of plans to continue to drive Ciclopoli double digit for next year. And we are confident that both in the Asian block and in the European block, we have solutions for next year to come back to double-digit growth for this product moving forward.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

Our next question is from Guilherme Sampaio from CaixaBank.

--------------------------------------------------------------------------------

Guilherme Macedo Sampaio, Banco Português de Investimento, S.A., Research Division - Analyst [11]

--------------------------------------------------------------------------------

Guilherme Sampaio from CaixaBank CPI. Just one question on cash flow generation this quarter. If you could provide more color on the headwinds behind the working capital evolution? (inaudible).

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [12]

--------------------------------------------------------------------------------

So on the cash flow generation, so overall, I think we had a very good cash flow generation, so we're very happy with that. On working capital in the U.S., there has been a slight change in payment terms with the big wholesalers. So that has driven a little bit of a negative twist to the working capital in the U.S. But I would say it's now absorbed. And moving forward, this will remain constant.

--------------------------------------------------------------------------------

Operator [13]

--------------------------------------------------------------------------------

We have a follow-up from Jo Walton from Crédit Suisse.

--------------------------------------------------------------------------------

Jo Walton, Crédit Suisse AG, Research Division - MD [14]

--------------------------------------------------------------------------------

If I could just follow up on the currency question that you had earlier. So far, at the revenue level for the 9 months, you were up 17%. But on constant currency, you were up 15.5%. So should we assume that, that just short of 2% impact at the sales level is also reasonable at the profit level? And that's what we should be thinking of, crudely speaking, for the full year as your currency impact?

And could I ask for a little bit more -- just a clarification, I think, on your actinic keratosis product. There was a comment that the -- a re-treatment study was needed for the EMEA (sic) [EMA] filing. Presumably, you're happy that the data that you have is enough for that, but you are looking to do an incremental study that you will be telling us about next year to try and tease out a bit more about that re-treatment. Do you think that second study that you are planning is going to be required to get the coverage and pricing that you want? Or is it just so nice to have that you can bring to the market after you've got your initial approvals?

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [15]

--------------------------------------------------------------------------------

Thanks, Jo. So again, on currency, I wouldn't speculate on what's going to happen and what are the differences between constant exchange rate and real exchange rate. So I think we just communicated in terms of forward-looking statement on currency -- sorry, on constant exchange rates, so we'll stick with that.

On AK, I'll turn it on to Bhushan. But I think before giving it to Bhushan, I think that the key message we wanted to convey with you is that, number one, re-treatment is a thing that doctors are absolutely used to. This is a chronic disease, and they are used to re-treat those patients. But we think we have an opportunity by doing some of those additional studies by not only cutting the re-treatment down but also further improve the value proposition by having even better efficacy at day 57, so short-term efficacy. Bhushan, is there anything you want to add on that?

--------------------------------------------------------------------------------

Bhushan Hardas, Almirall, S.A. - Chief Scientific Officer, Executive VP of R&D and Member of Executive Board [16]

--------------------------------------------------------------------------------

Yes. Thank you, Peter. To your first question, the European agencies asked us to create a data on what will happen if you re-treat the patients once they have a recurrency at (inaudible). And I think they are generating that data so that we can have in our label that the patients can be re-treated because this is what the physicians want on a day-to-day basis. So that is completely different issue, and I think we are pretty much geared up to that.

The second study that I was talking about, which is the intensifying the treatment, that is, as Peter said, it is only to further improve the product profile. And today, it doesn't affect what today's profile that we have from reimbursement of pricing perspective. This is completely add on later on when we have this data. Do I make it clear?

--------------------------------------------------------------------------------

Jo Walton, Crédit Suisse AG, Research Division - MD [17]

--------------------------------------------------------------------------------

Yes. And could I just also ask, please, for a comment on the net financial income? You had a very strong exchange benefit in the third quarter, so that you had net financial income rather than a sort of traditional net financial expense. Should we think of that as a one-off? And we should return to a normal EUR 4 million to EUR 5 million of quarterly net financial expense as we go through the end of this year and next year.

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [18]

--------------------------------------------------------------------------------

Yes, jo. So you're right. In the net financial income for the third quarter, the EUR 9 million improvement is largely driven to a positive exchange rate impact. But again, moving forward, I refuse to make any speculation on how this could look moving forward. So that's basically what I would like to answer to your question.

--------------------------------------------------------------------------------

Operator [19]

--------------------------------------------------------------------------------

Our next question is from Francisco Ruiz from Exane.

--------------------------------------------------------------------------------

Francisco Ruiz, Exane BNP Paribas, Research Division - Research Analyst [20]

--------------------------------------------------------------------------------

Well, almost all my questions has been answered. But I have another one on the cash flow. So can you give us an idea of how much of the milestones from Astra are included in this quarter?

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [21]

--------------------------------------------------------------------------------

Okay. So as you know, Francisco, we have announced a further milestone that will be paid by AstraZeneca, which is related to the combo launch in the U.S. We have not collected that as of yet. This will be collected in Q4. However -- so you will foresee the cash impact, that's very clear. In terms of other income impact, this will be very marginal since we have already forecasted that revenue in our models.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

The next question is from Jaime Escribano from Santander.

--------------------------------------------------------------------------------

Jaime Escribano, Grupo Santander, Research Division - Equity Analyst [23]

--------------------------------------------------------------------------------

I have one question. Could you elaborate a little bit more on Ciclopoli performance in Asia? What is exactly -- in terms of competition, what is exactly what you are facing? And can you confirm that Europe is doing okay? Or do you also see increasing competition in the European block?

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [24]

--------------------------------------------------------------------------------

Yes. Thank you, Jaime. So first, on Asia, the -- so the point is that in Korea, we have 2 types of new competition. First, we have some copies of Ciclopoli that has been -- that have been launched by local companies. And second, there is also a new chemical entity, so a different product that has been launched. So basically, it's about intensification of the competition. So what we have done with our partner in Korea, which is Menarini, we have looked at a specific action plan to mitigate these factors and to come back to growth for Ciclopoli as early as the Q4.

In Europe, it's a different ballgame. So as you know, the biggest market in Europe is Germany, and I think we have a very competitive position with Ciclopoli in Germany. The reason why you have seen a slower growth rate this year compared to last year, when you look at the European dermatology business, you will find a Ciclopoli isolated performance in Europe. And the reason is that the overall market of onychomycosis in Germany, which traditionally was growing 5% to 10%, is this year growing at very low single digits. So I don't know whether this is a thing that we will see in the future, but we remain very competitive and we continue to defend our #1 market share in this market. We have also recruited a new head of the business unit of OTC in Germany, who actually comes with a very high and deep knowledge of the OTC market in Germany. She has worked all her career at GSK. So we are very happy also to have been able to recruit the top-notch talent there to further drive our Ciclopoli business in Germany moving forward. So confident with double-digit growth for next year for Ciclopoli.

--------------------------------------------------------------------------------

Jaime Escribano, Grupo Santander, Research Division - Equity Analyst [25]

--------------------------------------------------------------------------------

Okay. Sorry, just one further follow-up question on the guidance. Bearing in mind the milestone and the other income that you expect to book in Q4, should we expect an upgrade in the overall EBITDA guidance? Or do you stick to the current guidance?

--------------------------------------------------------------------------------

Peter Guenter, Almirall, S.A. - CEO, Chairman of Management Board & Executive Director [26]

--------------------------------------------------------------------------------

No, Jaime. We stick with the current guidance. And as I mentioned, the to-be-collected milestone in Q4 is actually much more relevant when it comes to the cash than with the other income. So we have really -- we have already, in our models, recognized that other income to a very, very large extent. So it will hardly impact our EBITDA for the quarter to come.

--------------------------------------------------------------------------------

Operator [27]

--------------------------------------------------------------------------------

(Operator Instructions) There are no further questions that are coming through. I'll hand the call back to Pablo Divasson. Please go ahead.

--------------------------------------------------------------------------------

Pablo Divasson del Fraile, Almirall, S.A. - Head of IR & Corporate External Communication [28]

--------------------------------------------------------------------------------

Thank you, Jody. We are now going to close our Q&A session. And with this, we will complete our conference today. I want to thank you for your participation. You may now disconnect.